Bitcoin Bounces Off 16-Month Trough but Faces Sharp Weekly Drop Amid Crypto Sell-Off

Bitcoin shook off its lowest point in 16 months during Asian trading on Friday, rebounding about 5% to $66,145. Despite this rebound, the digital asset is still heading for a brutal third consecutive week in the red, down roughly 16% overall.

Feeling the heat alongside Bitcoin, the crypto markets wrestled with a broader retreat from riskier plays, fueled partly by doubts over how U.S. monetary policy might evolve. The earlier appointment of Kevin Warsh to lead the Federal Reserve sparked unease; known for opposing loose asset-buying schemes, Warsh's nomination has traders bracing for tighter financial conditions.

This shift rattled sectors aligned with speculative momentum, including the tech space - which often moves in sync with cryptocurrencies - further intensifying crypto's downturn.

One heavyweight feeling the fallout is Strategy Inc (MSTR). The company took a staggering $12.4 billion hit in its fourth quarter, a dramatic step up from losses of just over $670 million the year before. This drop is largely tied to weak Bitcoin prices dragging down the value of Strategy's sizable holdings.

Strategy's stash of 713,502 Bitcoins hasn't helped lately, especially since it paid an average of $76,052 per coin - far above today's trading levels near $66,000. The company had ramped up its Bitcoin position using a blend of debt and equity, which adds pressure when prices are falling because it risks forcing asset sales to cover obligations.

Meanwhile, other major digital currencies also managed modest bouncebacks but still locked in steep weekly losses. Ether jumped almost 5% to just above $1,900 but is still down 22% over the past seven days. Similarly, XRP and Binance Coin (BNB) clawed back gains of 7% and 3%, yet both look at weekly declines near 20%.

Solana's trend has been even rougher, poised for a 24% drop this week, while Cardano fell about 13.5%. Meme coins didn't escape the carnage either: Dogecoin shed 13%, and the politically themed $TRUMP coin plunged roughly 23% on the week.

Bitcoin has now surrendered over half its value since peaking in October - erasing any gains made since Donald Trump's victory in late 2024. And though it found short-term footing this week, the lingering question is how deep the correction might run if the Federal Reserve sticks to a hardline path and risk appetite stays muted.